28th April 2014

[SINGAPORE] The labour market in Singapore will remain tight until 2020 - and become even tighter for a full decade after that.

This was labour chief Lim Swee Say's outlook for the country's manpower situation in his annual May Day Message released yesterday.

"Competition for good people will not ease. Only better employers can attract and retain better people and grow more profitably," he said.

His comments come as the ongoing tightening of the labour market is spurring a much faster pace of economic restructuring.

On its part, the National Trades Union Congress (NTUC) has promised to push on with its plan to upgrade skills, create more good jobs for workers, and continue to grow the economic pie such that there is more to go around.

"This labour market tightness is not something that we can hope will go away. It won't go away," Mr Lim, NTUC's secretary- general, told reporters during a briefing to expand on the points in his May Day Message.

The Singapore economy is going through a transition towards one driven by productivity and innovation, rather than by boosting its manpower numbers.

This labour restructuring is causing much "stress" to all parties: businesses, workers, unions and the government.

Last year, Mr Lim noted how Singapore's total manpower grew 4 per cent, but productivity growth remained flat at zero per cent.

"The moment we fail in our restructuring, we will lose our competitiveness and growth. That's when job creation will slow down as well," he warned.

He painted a bleak scenario for Singapore where rank-and-file workers are replaced by robots; PMEs (professionals, managers and executives) are underemployed; mature workers cannot fit into workplaces because they are not age- friendly; working parents are unable to have a good work-life balance; and low- wage workers are stuck in a world of cheap-sourcing.

"If we allow these to happen, we will face higher unemployment - not just because of a job shortage, but also because of job and worker mismatches," said Mr Lim. Singapore should never take the healthy jobs situation that it has today for granted, he added.

Previously, a person had to compete with workers from other countries. Now, there is the added stress of competing with the advances of technology as well, as there is a fear that more employers will make use of robots to replace - not complement - their workers, he said.

Besides the workers and employers, Mr Lim said that customers and consumers, too, have to play their part in this ongoing effort to restructure the economy.

"The globalised world thrives on mutual dependency, mutual support and mutual acceptance. Good services beget good customers, and good customers beget good services," he said.

"As we strive to become a more advanced economy, we must also strive to be a nation of better customers and better people."

Overall, Mr Lim said Singapore's economic growth remains healthy with a tight labour market. Wages have continued to move up faster than inflation.

Describing these achievements as hard- earned, he took the opportunity to pay tribute to workers and the tripartite partners for their "hard work, resilience and unity".

"Even though we celebrate May Day amid labour shortages, we should be mindful that good jobs will always be the best welfare, and full employment the best protection for our workers, both young and old," said Mr Lim.

Separately, NTUC president Diana Chia said in her May Day Message that Singapore's unionisation rates are growing, at a time when many countries are experiencing the opposite.

Singapore's unionisation rate of resident workers rose 27 per cent last year, up from 20 per cent in 2002.

-By Lee U-Wen

Labour
market to remain tight until 2030: NTUC head

S’poreans must adjust mindset to
succeed in the economic restructuring ahead, says Lim Swee Say in May Day
Message

Source: Today Online / Singapore

SINGAPORE — The labour market is set to remain tight till 2020,
and even tighter all the way to 2030, said labour chief Lim Swee Say.

While the tightening of the labour market will spur a faster pace
of economic restructuring, the National Trades Union Congress (NTUC)
Secretary-General said the labour movement is determined to keep upgrading
workers’ skills and creating good jobs, in order to succeed in the transition.

To that end, he has called for an adjustment in Singaporeans’
mindset, to “change our economy, our workforce and our society for the better”.

Employers have to learn to make better use of every worker, and
treat every worker better, said Mr Lim in his May Day Message ahead of
Thursday’s celebration. “Competition for good people will not ease. Only better
employers can attract and retain better people and grow more profitably,” he
added.

Mr Lim noted that Singapore’s economic growth is healthy and wages
continue to move up faster than inflation, but he cautioned on the need to find
ways to go through the economic restructuring “as smoothly (and) as effectively
as possible”.

He told reporters: “Because if we get it wrong, our economy may
lose our competitiveness, our job growth may slow down, and eventually
businesses may either relocate or just completely close down their operation.”

Workers, meanwhile, should not take the tight labour market for
granted, Mr Lim said, as he pointed to the global move towards robotisation and
the use of technology to reduce dependency on labour. Hence, Singaporeans have
to “value our jobs more and take greater pride in what we do”.

Mr Lim’s comments came as figures released last week by the
Manpower Ministry showed that 11,560 workers were laid off last year, slightly
more than the 11,010 in 2012. Overall, the top reason for redundancy was the
restructuring of business processes, reflecting the ongoing productivity drive.
This affected 40 per cent of workers laid off last year, up from 37 per cent in
2012, the MOM said.

Senior Regional Economist at Barclays Leong Wai Ho felt Mr Lim’s
May Day Message was an “apt reminder that global competition is intensifying”.
“As wage costs rise due to the labour tightening and the ageing of our
workforce, along comes pressure for workers to be ever more productive and
value adding,” he added.

DBS Senior Economist Irvin Seah, meanwhile, noted that it remains
to be seen whether the tight labour market will slacken in, say, the case of a
recession. However, from a structural perspective, the population is ageing and
the foreign labour policy is tighter, so the labour market will remain
“persistently tight for many years to come”. On unemployment from the
restructuring, Mr Seah noted that the only way to mitigate this is to reskill
and retrain workers so they remain employable.

On the tight labour market, Deputy General Secretary of the
Amalgamated Union of Public Employees Yeo Chun Fing noted that workers may be
more stressed as employers push for higher productivity.

In his message, Mr Lim also said that as the Republic strives to
become a more advanced economy, it must also strive to be “a nation of better
customers and better people”. He urged Singaporeans to treat service workers as
equals: “The globalised world thrives on mutual dependency, mutual support and
mutual acceptance. Good services beget good customers, and good customers beget
good services,” he said.

Executive Secretary of the Healthcare Services Employees’ Union
Patrick Tay noted that his union members want their customers — patients and
their families — to treat healthcare staff with respect and honour. But the
mindset change will not be an easy task, he said, noting that expectations are
high. “It takes everyone to join hands to make Singapore more gracious and a
great place to live and to work in,” he added.

Sizes of
condominium units here are shrinking as developers battle to keep new project
prices affordable in ever tougher market conditions, a new study by property
consultancy Knight Frank has found. A string of cooling measures and stricter
lending guidelines have made it harder for home hunters to finance new
purchases.

The Wilshire
condo in upscale District 10 has been put on the market in its maiden attempt
at a collective sale. The Straits Times understands that owners of the 20-unit
development in Farrer Road were notified on Saturdaythat the sales
committee had obtained the requisite 80 per cent consensus needed to put the
condo up for sale en bloc.

Doing its job well has paid off for Centurion,
whose stock is flying high this year

Source: Business Times / Companies

AS THE only listed dormitory operator in Singapore, Centurion Corp
has attracted a fair bit of attention in recent months, particularly after last
December's riot in Little India. Two brokerage houses, AmFraser and DMG &
Partners, initiated "buy" calls in quick succession. The riot
highlighted a shortage of liveable spaces for workers such as dormitories - a
gap that Centurion fills, analysts noted.

Now, the company's stock is flying high at over 70 cents a share
last week - more than two-and-a- half times the 27 cents it traded at a year
ago. Construction group and joint-venture partner Lian Beng also bought a 5 per
cent stake in the company in March.

The key draw of the stock is how it gives exposure to cashflow-
generating property assets in the undersupplied segment of foreign worker
dorms, where the rent per bed has been increasing 20 per cent a year and
Centurion's Singapore occupancy rates are almost full.

The company is also expanding in Malaysia, venturing into
Indonesia and diversifying into student accommodation in Australia and other
educational hubs.

ANDY TAN looks into whether the structure of
S-Reits can be streamlined while they continue to retain their tax exempt status

Source: Business Times / Companies

REAL estate investment trusts (REITs) are hot properties.
According to the Asia Pacific Real Estate Association, REITs have outperformed
the equity and bond markets as an asset class.

From 2011 to 2013, Asian REITs returned 8.2 per cent per annum
(measured on the TR/GPR/APREA Composite REIT Index) against a lower equity return
of 3.8 per cent (MSCI Asia Equities Index) and even lower bond returns of 2.4
per cent (JPM Government Bond Index). Over a longer 10-year period, Asian REITs
also registered higher annual returns of 8.8 per cent compared to 7.6 per cent
for equities and 6.3 per cent for bonds.

In Singapore, S-REITs chalked up a total of 13.7 per cent (FTSE ST
REIT Index) against the 7.2 per cent for equities (Straits Times Index) for the
same three year period.

Notwithstanding the outperformance, there are rumblings on the
governance of REITs. To understand why, a short explanation of the unique
structure of REITs is in order. Unlike most listed companies, S-REITs are
structured as trusts. The assets of a REIT are held by an independent trustee
as the legal owner on behalf of unit holders. The trustee is responsible for
appointing and overseeing an external REIT manager to manage the assets.

Privatisation
fever has gripped the market again amid a spate of offers to buy out companies
such as Singapore Land, CapitaMalls Asia and Hotel Properties. The offers are
mostly being made on property plays just when their share prices are
languishing at sharp discounts to book values.

[WASHINGTON] Housing sales have stalled but the US economy is
rebounding enough from the winter chill to keep the Federal Reserve's stimulus
taper on track when policymakers meet this week.

All signs from members of the Federal Open Market Committee,
including Fed chief Janet Yellen, suggest that they will again cut back their
bond-buying programme in the monetary policy gathering.

That will keep in place their march towards policy normalisation,
the exit from extraordinary measures launched to prop up the economy during the
2008 crisis. The taper, which begun in December, has brought the total monthly
bond purchases down from US$85 billion to a current US$55 billion.

The FOMC will likely cut another US$10 billion from that. Ms
Yellen has said that the plan is to wind down the programme - which has sought
to hold down long-term interest rates to encourage investment and hiring - by
late this year, as the economy has enough momentum to push ahead on its own.

China Construction Bank Corp. (939), the nation’s second-largest lender by market value, reported wider lending margins in the first quarter, helping it to post its biggest profit increase in a year.

Net income rose 10 percent to 65.8 billion yuan ($10.5 billion) for the three months through March from 59.6 billion yuan a year earlier, the Beijing-based lender said in a filing to Shanghai’s stock exchange yesterday. That compares with the 65.2 billion-yuan median of eight estimates compiled by Bloomberg News.

The biggest growth in Construction Bank’s profit since the first quarter of 2013 may check concerns it will be hobbled by rising defaults amid the slowdown in an economy that had its first onshore bond default earlier this year. Shares of China’s four largest lenders are trading near record-low valuations.

The results “should reassure the bulls, and are better than the bears would have liked,” Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong, wrote in an e-mail yesterday. “The sector’s valuations remain attractive on several key metrics with high dividend yields and low earnings and book-value multiples.”

Shares of Construction Bank rose 0.4 percent to HK$5.33 as of 9:49 a.m. The stock has declined about 9 percent this year in Hong Kong, compared with the benchmark Hang Seng Index’s 5 percent drop. The lender was valued at 4.7 times estimated profit, less than half the Hang Seng’s multiple of 10.3.

Agricultural Bank

Construction Bank was the third of the four big lenders to report earnings in the past week. First-quarter profit grew 14 percent at both Agricultural Bank of China Ltd. (1288) and Bank of China Ltd. Industrial & Commercial Bank of China Ltd., the largest of the four, is due to post results on April 29.

Agricultural Bank reported first-quarter net income of 53.4 billion yuan after markets closed on April 25. The total compared with profit of 47 billion yuan a year earlier and the 52.4 billion-yuan median of eight estimates compiled by Bloomberg.

Big banks’ profit growth “has been slightly beating expectations,” May Yan, a Hong Kong-based analyst at Barclays Plc, said in an interview with Bloomberg TV today. “So far, the fee income growth has still been healthy and margin compression has been relatively slower.”

Margins Widen

Construction Bank’s net interest margin, a gauge of lending profitability, expanded to 2.81 percent at the end of March, from 2.74 percent at the end of December, according to the statement. The lender had outstanding loans of 8.68 trillion yuan as of March, 4 percent higher than at the end of last year.

Construction Bank’s soured loans rose 6.4 percent to 90.8 billion yuan as of March from the end of 2013, raising bad loans as a percentage of total lending to 1.02 percent from 0.99 percent, the company said. It set aside 10.7 billion yuan as provisions against potential losses on loans, an increase of 27 percent from a year earlier.

Banks’ bad loans increased for a ninth straight quarter as of December to the highest level since 2008, data from the China Banking Regulatory Commission show. New nonperforming loans amounted to more than 60 billion yuan in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported on April 9.

New CFO

Construction Bank appointed Xu Yiming as chief financial officer, pending CBRC approval, the lender said in a separate statement yesterday. Xu has been general manager of the bank’s assets and liabilities management department since 2005.

The lender acted as a policy bank for 40 years from its founding in 1954, disbursing government funds for infrastructure developments until China Development Bank Corp. was set up in 1994.

Chinese banks, seeking to diversify beyond traditional lending, are facing greater risks as they venture into new businesses such as wealth-management products, trusts, interbank lending, and lend more to small and mid-sized enterprises.

At least 30 Chinese investors in a troubled high-yield product protested on April 16 outside a Construction Bank branch in Shanxi province, demanding their money back. The lender is the custodian for the Songhuajiang River No. 77 trust, which missed six payments as of last month.

Compounding concerns over banks’ earnings are worries over lending to property developers following Zhejiang Xingrun Real Estate Co.’s collapse last month. That came after Shanghai Chaori Solar Energy Science & Technology Co. (002506) became the country’s first company to default on onshore bonds when it failed to make a full coupon payment on March 7.

U.K. house pricesincreased in April for a 15th month as the momentum in theproperty marketspread beyond London, Hometrack Ltd. said.

Values in England and Wales rose 0.6 percent, the same pace as in March, the London-based property researcher said in an e-mailed statement today. Forty-eight percent of postcodes recorded an increase, the highest proportion in a decade.

House prices are being driven by record-low Bank of England interest rates, a shortage of property for sale and a strengthening economy that’s creating jobs. Officials have said they’re monitoring the market for signs price increases may jeopardize financial stability.

“The pickup in the coverage of price rises is very clear-cut,” Richard Donnell, director of research at Hometrack, said in the statement. “Improving market sentiment and low mortgage rates are supporting increased activity.”

New buyers registering with real-estate agents to browse property rose 3.3 percent, compared with a 6.6 percent increase the previous month. The time a property is on the market before it sells dropped to 6.3 weeks, the lowest since June 2007.

Prices rose in all 10 regions covered by Hometrack. Gains were led by a 0.8 percent increase in London, though there were emerging signs of “price resistance” in the capital. The time on the market in London rose to 3.4 weeks from 2.7 weeks, while the share of postcodes reporting price gains fell to 66 percent from 76 percent and the proportion of the asking price achieved dropped to 99.3 percent from 99 percent, Hometrack said.

“While these changes indicate very strong market conditions, they suggest that buyers are starting to become less willing to bid up the cost of housing at recent rates,” Donnell said.